Nov 24, 2009

ABUJA (Reuters) - Nigeria plans to increase spending by a third next year, to help lift itself out of an economic downturn, overhaul its shambolic power sector and develop the Niger Delta, the restive heartland of its mainstay oil industry.

President Umaru Yar'Adua sent a 4.079 trillion naira 2010 budget proposal to parliament on Tuesday, a 32 percent increase in planned spending on 2009 which, if approved, will push sub-Saharan Africa's second biggest economy to a fiscal deficit of 4.79 percent.

About a third of the planned budget is capital spending on areas including infrastructure, the power sector and development in the Niger Delta, where an amnesty programme earlier this year has so far brought a lull in militant attacks on the oil sector.

"The purpose of the 2010 budget is to accelerate economic recovery through targeted fiscal interventions intended to further stimulate the economy and support private sector growth," Yar'Adua said in a budget statement presented to parliament by one of his aides.

The statement said 1.37 trillion naira was for capex and 2.011 trillion naira for recurrent, non-debt expenditure.

Total government revenue was seen at 2.517 trillion naira.

Yar'Adua said improving power infrastructure was a top priority and that Nigeria aimed to double electricity capacity to 10,000 megawatts (MW) by the end of 2011. Intermittent power supply is seen as a major brake on economic growth.

The spending plans for Nigeria, which vies with Angola as Africa's top oil producer, assume oil output of 2.088 million barrels per day (bpd), a benchmark oil price of $57 and an exchange rate of 150 naira to the U.S. dollar.